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August 2008 DOE Uranium Leasing Program 2008 Overview August 14, 2008 Steven R. Schiesswohl, Project Manager U.S. Department of Energy Office of Legacy.

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Presentation on theme: "August 2008 DOE Uranium Leasing Program 2008 Overview August 14, 2008 Steven R. Schiesswohl, Project Manager U.S. Department of Energy Office of Legacy."— Presentation transcript:

1 August 2008 DOE Uranium Leasing Program 2008 Overview August 14, 2008 Steven R. Schiesswohl, Project Manager U.S. Department of Energy Office of Legacy Management C-JD-5 Mine (active) C-CM-25 Mine (reclaimed)

2 August 2008 Uranium Leasing Program 2 Background The Uranium Leasing Program (ULP) began in the late 1940s when the U.S. Atomic Energy Commission (AEC) was authorized to withdraw lands from public use to ensure an adequate reserve of uranium and vanadium ores and associated minerals for the nation’s defense program. –Original leasing program ended in 1962, yielding more than 1.2 million pounds of uranium and 6.8 million pounds of vanadium, which generated $5.9 million in royalties to the federal government. In the early 1970s, the emphasis for the ULP switched from national defense to that of preserving the domestic uranium industry and infrastructure in support of commercial nuclear power. –Current leasing program initiated in 1974, with two 10-year lease periods that yielded approximately 6.5 million pounds of uranium and 33.4 million pounds of vanadium, which generated $53 million in royalties to the federal government.

3 August 2008 Uranium Leasing Program 3 Background (continued) All leases expired in 1994, allowing the U.S. Department of Energy (DOE) to conduct a Programmatic Environmental Assessment (PEA) for the ULP. The PEA was completed in July A Finding of No Significant Impact was issued in August 1995 for the proposed action, which called for continued leasing of DOE-managed lands for exploration and production of uranium and vanadium ores. DOE subsequently (1996–1997) executed new 10-year lease agreements with previous lessees that wanted to continue with the ULP. –During that lease period, 4 of the active lease tracts resumed mining operations and produced over 65 thousand tons of ore, which resulted in production royalty payments of approximately $5 million to the federal government.

4 August 2008 Uranium Leasing Program 4 Background (continued) A second PEA was completed in June 2007 and a Finding of No Significant Impact was issued in July 2007 for DOE’s preferred (Expanded Program) alternative. This alternative included continuing the leasing program for an additional 10-year period, extending the current leases for that same period, and expanding the program to include the competitive offering of DOE’s inactive lease tracts to the domestic uranium industry. The 2007 PEA put the ULP in perspective: –ULP ore reserves are estimated at 13.5 million pounds of uranium (approximately 1.5 percent of the known reserves in the U.S.). –Known ore reserves in the U.S. are purported to be nearly 900 million pounds of uranium (approximately 8.5 percent of the known reserves in the world). –Known ore reserves in the world are reported to be 10.5 billion pounds of uranium.

5 August 2008 Uranium Leasing Program 5 Current Status The DOE Office of Legacy Management (LM) currently manages 32 lease tracts (25,000 acres), all located within the Uravan Mineral Belt in southwestern Colorado (see lease-tract location maps). There were 13 lease tracts actively held under lease. On April 30, 2008, DOE extended those leases for an additional 10-year period.

6 August 2008 Uranium Leasing Program 6 Current Status There were 19 remaining lease tracts that were inactive. In March 2008, DOE offered these inactive lease tracts to the domestic uranium industry through a web-based competitive bid solicitation. Bids were submitted to DOE by May 9, 2008, and on May 15, 2008, DOE hosted a public bid opening. Thirteen entities submitted a total of 59 bids. After review of corporate documentation required for the solicitation, the apparent high bidders were notified and 17 of the 19 leases were awarded in June The term of the leases are all for ten years. In the solicitation, two apparent high bidders withdrew their offers and the leases were awarded to the No. 2 bidder in each case. One the remaining 2 leases is not economical and is being held back by DOE and the final lease tract was rebid and the bids were received on July 17.

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9 Uranium Leasing Program 9 Royalties The Atomic Energy Act of 1954, as amended, authorized the AEC (predecessor agency to DOE) to collect royalties on the production of uranium and associated minerals extracted from lands under its administrative control. That authorization was brought forward into the 1974 leasing period by AEC Circular 8, Revised, which was subsequently codified for DOE as Title 10 Code of Federal Regulations Part 760 (10 CFR 760). In the future, DOE will receive $500,000 per year from its lessees in the form of minimum annual royalty payments. DOE will receive production royalties from its lessees for all ores produced from the lease tracts. The 2007 PEA estimated that these future production royalties could total $10 million annually once lease operations reach previous production levels (estimated at 150,000 tons of ore at prices equitable to those seen in the first quarter of 2007—$80 per pound of uranium and $6.60 per pound of vanadium).

10 August 2008 Uranium Leasing Program 10 Agency Roles and Responsibilities DOE-LM is the managing federal agency for the ULP and is responsible for administering the program, including the National Environmental Policy Act and other environmental requirements. The Bureau of Land Management (BLM), as the federal surface-management agency, is responsible for managing all non-DOE lease-related activities (oil and gas, grazing, recreation, etc.) that occur on these public lands. –DOE and BLM are developing a Memorandum of Understanding to define these roles and responsibilities. –DOE coordinates with BLM to review all lessee-proposed plans to minimize the potential impacts to the various resources.

11 August 2008 Uranium Leasing Program 11 Agency Roles and Responsibilities (continued) The Colorado Division of Reclamation, Mining and Safety (CDRMS) is the lead state agency involved in ULP lessee-proposed activities. –CDRMS requires and issues permits for all mineral exploration, mining, and reclamation activities conducted in Colorado. –DOE coordinates with CDRMS to review all lessee-proposed plans (and subsequent activities) to ensure compliance with applicable statutes, rules, and regulations. –CDRMS regulations include applicable reviews by all local agencies.

12 August 2008 Uranium Leasing Program 12 Reclamation Requirements DOE’s lease agreements require each lessee to post a reclamation- performance bond (payable to DOE) in an amount adequate to cover the final reclamation of all lessee operations, should the lessee default on its responsibilities. –DOE establishes the required bond amounts on a site-by-site basis. –The bond amounts are calculated such that DOE could subcontract all final mine-site reclamation activities at no cost to the government. –The bond amounts are revised as the lessee’s operations change. CDRMS also requires a reclamation-performance bond be posted for all mineral exploration or mining activities conducted in Colorado. –If CDRMS determines that DOE’s bond is sufficient to cover all necessary reclamation costs for the lessee’s operations, then CDRMS can establish its bonding amount at a minimal level. DOE and CDRMS coordinate the oversight of reclamation activities to ensure that both agencies are satisfied once final reclamation is complete.

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